Bank of Japan helps boost dollar against the yen

NEW YORK -- Aggressive purchases of dollars by the Bank of Japan and expectations that the Federal Reserve Board could follow suit helped strengthen the dollar against the yen yesterday.

Against most European currencies, however, the dollar slipped, although it gained on the British pound.

The dollar jumped against the yen in Tokyo trading as the Japanese central bank spent about $1 billion to try to keep the yen from rising. The dollar held its gains and finished at 103.75 yen in New York, up from 103.05 Monday.

"Several rounds of intervention in Tokyo propped up the dollar," said Kevin Lawrie, foreign-exchange manager at Mellon Bank in Pittsburgh. "The Federal Reserve and the Bank of Japan have speculators nervous."

It is not so much the Bank of Japan that has shaken traders' nerves; the bank has bought dollars repeatedly this month. What stunned investors was Thursday's abrupt move by the Fed, which bought the dollar to slow its seven-month swoon -- and in doing so pushed it up about 5 percent.

The dollar had slumped to a post-World War II low of 100.35 yen Aug. 17, down 19 percent since the start of the year.

After rising about 1 yen in Tokyo yesterday, the dollar settled into a narrow range in London and New York as traders remained wary of provoking the Fed.

"The 100-yen level will probably hold because the central banks look eager to stop the yen at these levels," said Don Quattrucci, assistant vice president for foreign exchange at Shawmut Bank Connecticut.

Japanese officials have bemoaned the yen's gains, asserting that its strength could derail the country's nascent economic recovery by making Japanese products more expensive abroad.